Coal heading out of Sparwood. Phil McLachlan/The Free Press/File

Coal markets remain volatile; demand for thermal declines, metallurgical remains strong

According to Teck, demand for seaborne steel making coal was strong through the second quarter

By James Snell –

Moodys, one of the world’s largest credit rating agencies, has downgraded the outlook for thermal North American coal from ‘stable’ to ‘negative’. The 12-18 month projection suggested problems with reduced demand, profitability, and low export prices.

Moody’s price-range for coal exports is unchanged: $60-$90/metric tonne for Newcastle thermal coal and $110-$170/metric tonne for high-quality metallurgical coal.

In March 2019, Bloomberg reported, “China remains key to the outlook for the thermal coal market but ongoing policy uncertainty is keeping miners on edge and forecasters guessing about what’s next from the world’s biggest coal consumer.”

According to Statistics Canada, Canadian coal production in 2018 was 62.3 million tonnes – worth approximately $7.5 billion. Canada exported 34 million tonnes and imported 7.6 million tonnes. Canada is the world’s third largest exporter of metallurgical coal, after Australia and the United States. Alberta and British Columbia produce 85 per cent of Canada’s coal.

Chris Stannell, Public Relations Manager with Teck Resources, said the outlook for local mines is good.

“This [Moody’s] sector outlook refers to the thermal coal market, which is coal used for energy generation,” he said. “This does not relate to Teck or our operations in the Elk Valley, as we produce steelmaking coal, which is used in the production of steel.”

Stannell added, “Looking at steelmaking coal, demand for seaborne steel making coal was strong through the second quarter, supported by continued steel-capacity growth in India and Southeast Asia, and the relocation of steel production to coastal areas in China.”

Matt Preston, Research Director – North America Thermal Coal Markets at Wood Mackenzie said that thermal coal markets are in “structural decline” while the metallurgical coal market has a more positive outlook.

“The price of natural gas is low,” he said. “That means the demand for thermal coal has dropped off. However, the metallurgical coal market is more dependent on economic activity and manufacturing.”

The Wood Mackenzie website stated that “The coal market has entered an extremely volatile period after years of oversupply, slowing capital investment and weak global demand. The impact of Chinese policy on its large domestic industry has caused a rollercoaster effect in the smaller seaborne market. Metallurgical coal prices were particularly affected – thermal coal prices less so, but Chinese policy was still a significant influence.

“In a market environment such as this, it’s more important than ever to stay ahead. But how can you interpret demand sustainability when competition with other fuels is a key factor? And how can you maximize the return from your investments in the coal industry when it has been downsizing?”

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Ktunaxa, supporters celebrate protection of Qat’muk and the Jumbo valley

Speeches, acknowledgements and ceremonies mark an emotional gathering in Cranbrook

Edibles now offered in Fernie cannabis shops

As of October 17, 2019, almost a year after the official legalization… Continue reading

SAR picks up two sledders after night spent outside

Fernie and Sparwood Search and Rescue (SAR) were called to action on… Continue reading

Community Appreciation Day at FAR

A thick blanket of snow fell on skiers and snowboarders alike on… Continue reading

The Fernie Hotel to host bushfire fundraiser

Putting a charitable spin on your typical Sunday Funday this weekend at The Fernie Hotel

B.C. VIEWS: Few clouds on Horgan’s horizon

Horgan’s biggest challenge in the remainder of his term will be to keep the economy humming along

Victoria family focuses on ‘letting go, enjoying time together’ after dad gets dementia

Walter Strauss has developed an interest in music and now takes line dancing classes

B.C. forest industry grasps for hope amid seven-month strike, shutdowns, changes

Some experts say this could be worse for forestry than the 2008 financial crisis

Northern B.C. RCMP investigating alleged sexual assault in lingerie store

One person was transported by ambulance to hospital following RCMP investigation at Sedaz

UBC, Iranian-Canadian community create memorial scholarship in honour of victims

The Jan. 8 crash killed 176 people, including 57 Canadians

Disrespectful that Horgan won’t meet during northern B.C. tour: hereditary chief

Na’moks said he was frustrated Horgan didn’t meet with the chiefs

Hwy 3 to close for avalanche control on Jan. 19

The road is expected to be closed from noon to 3 p.m.

Most Read